Why a Public Insurance Plan is Essential for Health Reform

Source: Alexander Hertel, Economic Policy Institute, EPI Policy Memorandum #141, April 23, 2009

Many leading policy makers, including President Obama and Senate Finance Committee Chairman Max Baucus, have argued that the creation of a public insurance plan is a necessary part of comprehensive U.S. health care reform. This public insurance plan would compete directly with private insurers within a new national insurance exchange. Americans in the exchange would be able to choose between an array of private plans, or the new public plan, within a marketplace that ensured a common set of rules for all insurers. Some have argued that a well-designed exchange with sufficient regulations would make a public plan option unnecessary. This is unlikely to be the case as a public plan provides crucial benefits to the U.S. health care system even within a well-designed exchange.

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